Chinese tariffs risk US$200 billion of US gas investments, may spoil America’s ambition to become top global exporter
- Two-thirds of the 310 million tonnes of planned US LNG annual capacity spread over 25 projects have not yet secured funding
- The natural gas projects require more than US$200 billion worth of investment
China’s sharp retaliatory tariff hike on US liquefied natural gas (LNG) will make it challenging for US exporters to secure purchase commitments and project financing, analysts say.
A 25 per cent tariff starting June 1 – up from 10 per cent in September – will make it uneconomical for Chinese buyers to import from the US, forcing US sellers to seek long-term purchase commitments elsewhere, a prerequisite for getting project financing.
The hike, part of Beijing’s retaliatory tariff increase on US$60 billion of US imports, came after the Trump administration raised tariffs from 10 per cent to 25 per cent on US$200 billion of Chinese goods earlier this month.
US LNG supply is part of the ongoing trade talks aimed at finding solutions to narrow the bilateral trade deficit in China’s favour and resolve other trade and investment disputes.
While European buyers have bought a lot more LNG from the US last winter, they are also well-supplied by Russian gas – mainly via pipelines but also increasingly in chilled liquefied form and delivered by vessels.